The Invictus exploration process is turning into a gambling circus after the company announced that it has established new discoveries within the failed Mukuyu 1 body. In an update the company claimed discovery of more than a dozen more hydrocarbon zones, a few weeks after the drilling project hit a snag due to technical complications.
The latest finding comes on the backdrop of significant losses realised by investors including Mangwana Capital who risk losing investments valued at US$16 million on the basis of a weak efficient market hypothesis (a process of insider trading).
The Australian Stock Exchange (ASX) listed Invictus Energy Ltd (IVZ.AX) began drilling one of two exploration wells for oil and gas in the northern part of Zimbabwe in Sep 2022. The oil and gas extraction company has been reporting at least USD$1 million in losses in successive years since 2019. The latest proclaimed discovery of oil deposits in a landlocked country does not increase odds of a successful finding, given the historical postulations around it. Gas and oil have long been touted as being present in certain parts of the country for almost a century but no substantial explorations had been done prior to the one being done by Invictus.
The initiation of oil extraction at Invictus’ Mukuyu 1 rig generated investor frenzy with speculative bets driving volumes up by a significant margin. In the third quarter ending 31 Dec 2022, the company injected AUD$ 25,225 000 (USD17,78 million) after a rights issue. The initiation of the failed Mukuyu-1 emerged as a success pillage option for a semi-informed public, which hailed the half findings as success.
Odd of success are very narrow given that the company has already stretched its drilling beyond 4000 meters. In Africa, the average drilling depth normally ranges between 2500 feet and 4500 feet. Invictus Energy has exceeded the limit marking exceedingly deeper margins than average.
The investment in the mining discovery carries a chunk of risks which a rational investor and the Securities and exchange commission should not base the investment options on the proclaimed discoveries. The risks should be optimised either by having an independent assessment appointed by investment boards such as SECZIM or by banning the external funding of new explorations.